SoundExchange Copyright Royalty Board Proceeding

On June 11, 2021, the Copyright Royalty Board (CRB) Judges issued a determination in favor of SoundExchange in a proceeding to set royalty rates for digital performances of sound recordings over the internet by non-interactive music streaming services, known as Web V. Representing sound recording copyright owners and recording artists, SoundExchange retained Compass Lexecon economists Jonathan M. Orszag and Professor Robert D. Willig to analyze the issues and provide expert testimony. Opposing parties sponsored reports and testimony from five economic experts. 

Mr. Orszag put forth testimony proposing royalty rates based on a benchmarking analysis and rebuttal testimony addressing flaws in all five opposing economic experts’ analyses, while Professor Willig proffered testimony proposing royalty rates based on opportunity cost and bargaining models fit to financial and consumer survey data, and rebutted testimony from two of the opposing economic experts.

After hearing nearly seven days of trial testimony from Mr. Orszag and Professor Willig, the CRB Judges established per-play royalty rates that are 17% higher for ad-supported services and 8% higher for subscription non-interactive streaming services. As a result, SoundExchange, the record companies, and music artists will earn many hundreds of millions of dollars more from streaming royalty revenues between 2021 and 2025. The opposing experts had proposed a range of decreases in these rates (with some opposing experts proposing sharp decreases); the CRB Judges rejected such low rates and promulgated new rates with significant increases. In the prior Web IV proceeding, the CRB Judges had lowered the then-statutory rates, so their decision to increase rates in the Web V decision reflects an important victory for SoundExchange, the record companies, and music recording artists. As SoundExchange CEO Mike Huppe put it, the decision “means that creators will be compensated more fairly when their recordings are played on digital music services” and represents “a step forward toward building a healthier music industry.”

Mr. Orszag was supported by Aren Megerdichian, who led a team that included Marc Huntley, Lily Chen, Robert Foley, Nathan Hyatt, Neil Ries, Anastasia Thatcher, Yu Zhu, Akawin Tanjitpiyanond, and Eugia Yao. Professor Willig was supported by Peter Clayburgh, who led a team that included Gilad Levin, Rodrigo Montes, David Fenichel, James Tam, and May Huang.